FTC recovers billions of dollars for consumers

The FTC brings enforcement actions against companies it alleges have engaged in unfair and deceptive business practices. When appropriate and possible, it obtains refunds for people harmed by the defendants’ practices. Out-and-out scammers have often spent their ill-gotten proceeds funding lavish lifestyles.

In its 2018 FTC Annual Report on Refunds to Consumers, the agency says it returned more than $2.3 billion to consumers in the twelve months ending June 30, 2018. In most cases, the FTC hires an administrator to handle the refund process. It typically requires the company settling the action to provide a list of customers and the amount of money they spent.

If the agency can’t secure a company list, it uses a claims process to identify people due a refund. That may involve advertising and/or consulting the FTC’s Consumer Sentinel Database, which contains millions of complaints filed directly with the FTC or with other organizations, including the BBB.

In rare circumstances, the company that settles an enforcement action handles the refund process. In a landmark case, VW was required to refund $2.2 billion in a buyback program for owners of VW and Audi diesel cars fitted with illegal emissions defeat devices. Another $4 million was refunded in a settlement with Amazon over unauthorized in-app purchases by kids.

The FTC sent checks totaling $122 million to 2.2 million consumers in the period covered by the report. An average of 67 percent of first-round distribution checks were cashed. If the original settlement or amount left over from uncashed checks isn’t large enough to justify the cost of an initial or second mailing, the funds are turned over to the U.S. Treasury - $12.5 million in this reporting period.

How much each consumer receives depends on how much the FTC is able to recover from the company. First time distributions in the twelve months covered by this report ranged from a median check amount of $27 in one case to a median amount of $8,181 in a settlement with Cardinal Health. Those refunds went to hospitals and clinics that Cardinal allegedly overcharged for certain drugs.

FTC enforcement actions involve many different types of companies, but ones the BBB often warns consumers about were well-represented in a list of 35 cases:

Eight were Health Care companies, four of which involved unproven dietary supplements.

Six were Debt Management/Credit Counseling companies.

Six were Business Opportunity/Work-at-home Plans.

Three were bogus or abusive Third Party Debt Collectors.

The most disturbing case involved MyEx.com, a revenge porn website that allowed people to post intimate pictures and videos of other people and then charged the victims up to $2,800 to have them removed. A court ordered that the website be shut down permanently and its operators pay more than $2 million in restitution.

The FTC’s report details the number of refunds issued by state. In Tennessee, $3.2 million was refunded to 42,139 people. The numbers for Mississippi were $1.3 million in refunds to 18,479 people.

The FTC never asks you to pay a fee or provide sensitive information like your Social Security Number as a condition of getting a refund. If someone claims to be from the FTC and asks for money, it’s a scam. A list of all active refund programs can be found at www.ftc.gov/refunds.

Randy Hutchinson is the president of the Better Business Bureau of the Mid-South. Reach him at 901-757-8607.